Villar Mir & IE To Sign An Agreement For Fifth Tower

26 January 2016 – El Confidencial

Nine months after winning the bid arranged by the Town Hall of Madrid to construct a skyscraper in the capital’s new financial district, Grupo Villar Mir has reached an agreement with Instituto de Empresa (IE) to allow the business school to occupy the majority of the building.

El Confidencial has confirmed with several sources close to the negotiations that the two parties expect to sign an agreement this week. And that signature will signal the starting gun for Madrid’s new skyline, as well as ensuring the viability of the project after several months of uncertainty.

The future picture of the five skyscrapers underwent some serious difficulties last summer when the initial candidate proposed by Grupo Villar Mir, the prestigious Mount Sinai hospital group, decided not to go ahead with its plans to open a health centre in the fifth tower.

In fact, the owner of OHL was awarded the land on the basis of the proposal that it would house a private hospital, with recreation and retail service areas. The plans were presented together with a letter of intent from Mount Sinai, saying that it would occupy the fifth tower, but that ended up being worthless.

Following the exit of the US group, Villar Mir began making contact with several real estate consultancy firms to find a new tenant that would comply with the requirements imposed by the town hall, namely that the property must be used for health or education purposes. Those conversations have ended up with the proposed agreement with the IE Business School.

The prestigious centre, whose MBA has just been chosen as the 12th best in the world and the best in Spain according to the Financial Times, is continuously looking for spaces to expand its educational offering. As such, it is now the neighbour with the most properties in the prestigious neighbourhood of Salamanca, which is home to its different centres, above all, around Calle María de Molina.

With the move to the fifth tower, the educational empire controlled by Diego del Alcázar would expand its classrooms beyond its traditional area of operation, but would maintain its policy of operating within Madrid and in the most representative areas for the business world.

75 year concession

The fifth tower is expected to be completed within four years, by 2020. It is an ambitious plan, which Grupo Villar Mir will tackle in partnership with the Swiss fund Corestate. The two partners have created the company Iberian Corestate, whose first operation will involve the investment of €240 million in the new skyscraper.

On the basis of the original design that won the bid, the new building will have 52,500 m2 of public space and 17,500 m2 of retail space. It will be constructed on land that will continue to be owned by the town hall, but which will be operated by Grupo Villar Mir for the next 75 years.

The group was awarded this concession after committing to pay a fee of €4 million per year to the town hall for the duration of the concession period, a figure that is much higher than the €1.9 million bid starting price.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

‘Quirón Salud’ Considers Opening A Hospital In The Fifth Tower

7 October 2015 – Cinco Días

The Quirón Salud group is currently considering opening a hospital in the so-called fifth tower, the skyscraper that the Villar Mir group is planning to build at the northern end of the Paseo de la Castellana, on land that was previously home to Real Madrid’s former Ciudad Deportiva. This step would enable the company led by Juan Miguel Villar Mir to construct this emblematic building.

The Villar Mir group was awarded the plot of land next to the Cuatro Torres in April. The company is planning to build a new skyscraper on the site and has always hoped that building would house a private health centre. The corporation won this project, through its subsidiary Inmobiliaria Espacio, but does not have any tenants for the property for the time being.

Initially, the sector thought that the US hospital group Mount Sinai was the most likely candidate to occupy the skyscraper, in its first expected foray into Spain, but the numbers did not stack up for the healthcare company – it concluded that the rental charge was too high for a social use building, according to sources close to the operation.

Now, the baton may be passed to Quirón Salud, the main private hospital group in Spain, which was created following the merger of IDC Salud (formerly Capio) and Quirón. According to sources at the company, it is currently evaluating the project. The company has 70 health centres, including the Fundación Jiménez Díaz, and manages several public hospitals in Madrid, as well as a number of prestigious clinics such as La Luz, San José and the Ruber, in the capital and Teknon and Dexeus, amongst others, in Barcelona. However, the company has not yet confirmed what kind of centre or facilities it would consider opening in the tower.

Two weeks ago, it was announced that Villar Mir will receive help from the Swiss fund Corestate Capital to construct the skyscraper. In a statement, the company announced that the project will require investment of €240 million, and although it did not specify how much each partner will invest, it did say that the possible tenants will be “a hospital, university or government body”. In fact, construction of the property is not expected to start until the tenant (client) has been identified so that the building can be tailored accordingly.

Over the last few days, the possibility of opening a business school in the tower has been evaluated. Some market sources insist that it will be hard for Quirón to make the numbers stack up to open a hospital in the skyscraper.

Villar Mir acquired the plot of land in a tender after presenting the highest bid; the company will pay the Town Hall an annual fee of €4 million for 75 years, in other words, €300 million in total. The plot has a surface area of 67,000 m2 and a buildability of 70,000 m2, of which 52,500 m2 must be allocated to social use (for example, a hospital); the remainder will be developed as retail space. That part is precisely what the hundreds of employees who work in the four adjoining towers want the most, given the lack of restaurants and services currently in the area.

Villar Mir also owns one of those skyscrapers, Torre Espacio, which is currently up for sale, with an asking price of around €600 million. The possible bidders include international funds, such as UBS, Aca, Corporación Financiera Alba and Pontegadea.

Original story: Cinco Días (by A. Simón)

Translation: Carmel Drake

Villar Mir Joins Forces With Corestate To Fund Fifth Tower

24 September 2015 – Expansión

The company led by Juan Miguel Villar Mir has signed an agreement with the Swiss fund Iberian Corestate to jointly develop the plot of land next to the Cuatro Torres complex, on the Paseo de la Castellana in Madrid, following the problems he encountered trying to finance the project by himself.

Grupo Villar Mir decided to look for a partner to reactivate the project to construct a new building on the plot of land located behind the Cuatro Torres complex, following the difficulties it faced tackling the construction alone, due to the need to inject €500 million into OHL. To this end, Villar Mir has signed an agreement with the Swiss fund Corestate, a real estate investment specialist, to invest €240 million in the project through its company Iberian Corestate Capital Advisors. (…).

Last year, Villar Mir was awarded the concession to operate the plot of land, which is owned by the Town Hall of Madrid, after it agreed to pay a fee of almost €4 million per year for the next 75 years. Villar Mir’s company, Espacio, had planned to construct a tower on the site, of a similar height to the other four skyscrapers (the tallest one measures 250m), which would require an investment of around €450 million.

That is not the only asset that Villar Mir owns in the complex. The company invested €400 million in Torre Espacio, an office building that was inaugurated in 2007, of which €187 million was used to purchase the land.


(…). Following the failed negotiations with the Mount Sinai hospital group…Villar Mir is now studying other options, including the option of signing a deal with a tenant form the world of academia or changing the structure of the building to make it more suitable for the operations of a hospital company.

Original story: Expansión (by Rocío Ruiz and Carlos Morán)

Translation: Carmel Drake

Villar Mir Seeks Tenant For 5th Tower After Mount Sinai Withdraws

12 August 2015 – El Confidencial

The future of Inmobiliario Espacio’s new skyscraper is up in the air. Just four months after Juan Miguel Villar Mir’s company was awarded the concession to use the land next to the Cuatro Torres business district, it has been left without a tenant for the site and is assessing alternative solutions with various candidates.

The future of the fifth tower, which Madrid’s Town Council awarded to Inmobiliario Espacio in April as Ana Botella’s term in office drew to a close, is up in the air. And not just because of the change in local government and political ideology that took place following Manuela Carmena’s arrival at the Palacio de Cibeles in May, but also, and above all, for purely commercial reasons.

The proposal that enabled the company, controlled by Juan Miguel Villar Mir, to win the contest centred around the new skyscraper housing a private medical centre, as well as recreational and retail space – an arrangement that the businessman had agreed with the prestigious Mount Sinai group.

In fact, according to sources close to the deal, the medical group had signed a letter of intent with the Spanish company, but had not entered into a binding contract. As such, the prestigious US centre has been able to back out of the deal and leave Inmobiliario Espacio without a tenant and therefore, without the key required to access the bank financing that is so critical to making this project work. This situation has forced Villar Mir to start looking for alternatives.

Several sources have confirmed that various consultancy firms are working on the search for an alternative to the Mount Sinai project. The options range from reaching an agreement with another medical group – the Mayo Clinic, IDC Salud, HM Hospitales and Vithas have all been considered – ; to modifying the project to accommodate another kind of tenant, such as a university or business school; and even, to changing the initial idea of building a skyscraper to construct another kind of property instead, which would be cheaper to build. Any such change would require the approval of the Local Council.

“Hurricane Carmena”

According to sources close to the Villar Mir Group, the new Local Council has not yet definitely approved Inmobiliario Espacio’s proposal, which means that the project may still be suspended if the numbers do not add up. This threat has been looming since Ahora Madrid was elected into office (in May), but it would be difficult to justify from an economic perspective, given the (negative) impact its cancelation would have on the public coffers. (…).

According to the terms of the concession, the Town Hall will continue to own the plot of land next to the Cuatro Torres site and the winning bidder (in this case Inmobiliario Espacio) will have the right to use the land for a period of 75 years, in exchange for the payment of an annual fee throughout the concession term, which Ana Botella’s team had set at a minimum of €1.9 million, but for which Villar Mir ended up offering more than double (€4.0 million).

Since Inmobiliario Espacio does not own the land, it will have to finance the entire build cost of the skyscraper, estimated at €100 million out of its own pocket, or find a way of offering the banks some kind of guarantee (other than the land) to convince them to grant a loan…in these kinds of project, banks tend to rely on a guaranteed tenant, but that is something that Villar Mir lacks at the moment and explains the current wave of activity to find a solution.

The problems associated with the fifth tower come at a particularly difficult time for Grupo Villar Mir, as its flagship company OHL is struggling to generate cash, whilst at the same time is facing corruption and financing problems…in recent years, the parent company has embarked on several highly ambitious transactions, including the purchase of a 25% stake in Colonial, a 19% stake in Abertis, Operación Canalejas and the fifth tower. (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake